3.11 INTERPRETING RELATIONS BETWEEN NET INCOME AND CASH FLOW FROM OPERATIONS. Three years of...

3.11 INTERPRETING RELATIONS BETWEEN NET INCOME ANDCASH FLOW FROM OPERATIONS. Three years of combined data for two firms appear below (in millions).

Firm A

Firm B

Net income

$ 996

$2,846

Cash flow from operations

$3,013

$3,401

The two firms experienced similar growth rates in revenues during the three-year period. One of these firms is Accenture Ltd., a management consulting firm, and the other is Southwest Airlines, a provider of airline transportation services. Identify each firm and explain your reasoning.

Dec 08 2015 11:22 AM

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Srishti B
answered on October 04, 2016

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Firm A would be Southwest Airlines and Firm B would be Accenture Ltd

The reason is that Southwest Airlines would be capital extensive company and would have a huge amount of...

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